Occupy Wall Street and Beyond

Occupy Wall Street is a protest movement against inequality, greed, corporate-government nexus and police brutality which broke out on September 17, 2011 in Zuccotti Park of Wall Street in New York. The international protest was named “Occupy Movement” and in other parts of the United States, the movement was called “Occupy Together”. There is no formal, explicitly stated leadership and the protestors are mostly young and unemployed. However, there are moderators, and as it happens in any society, movement or organization, leaders have emerged. The noise, complete lack of civility and violence in the movement has often been pointed out by the critics. Police brutality is rampant and many protestors were arrested.

The eruption of the protests

The protests broke out when Adbusters foundation in Canada urged people to peacefully occupy the Wall Street to protest against the growing disparity of wealth and the government’s rescue package to deal with the failures of the financial crisis through their email list. Slowly, many other groups joined in to organize the movement which was largely inspired by the strategy of the Arab Spring protests. The protests began when thousands of protestors marched through the streets. In a month, the demonstrators were tens of thousands in number and held protests in close to thousand cities across the world. In two months, the movement had spread to 2,609 towns and cities across the world. The protests slowly led to arrests and the police mistreatment of protesting women and journalists were controversial.

Goals of the movement

The stated goal of the movement was protesting the Wall Street for its collusion with the state. The explicit goal clashes with the views of many critics, but there is a clustering of many mutually incompatible political positions among the protestors. Though the leaders of the movement were very much against the media reading too much into their positions other than the protesting Wall Street, the protestors in other towns and cities were free to define their positions. Social and economic justice, better employment opportunities and working conditions, income equality, banking reforms and the elimination of corporate power are the demands which echo the most.

The role of the Wall Street

The protestors tend to believe that the Wall Street and corporate greed are largely responsible for the financial crisis and resulting stagnation. The protestors oppose bailouts, and suggest banking reforms and a better regulatory framework. Many economists argue that the stock market serves a healthy economic purpose, and that the Wall Street couldn’t have brought about the crisis by its own. They argue that the blame should be shared with the Federal Reserve System which issues cheap, artificial credit and distorts the market signals to investors and individual businessmen. The Federal Reserve System has been quite active for long to rescue financial firms which run into trouble, and to compel the taxpayers to bailout these companies.

The Political Slogan: “We are the 99%”

The protestors held a themed sign which read “We are the 99%”. It was in reference to the growing inequality between the majority of the population in the United States and an elite minority, which according to the protestors, arrogated to themselves, much of the wealth and political clout. The slogan emphasizes the notion that 1% of the population owns a significant part of the wealth in the United States. It is also argued that the income disparity has gone up slightly after the economic recession. Though the concentration of wealth is often overstated, there is much truth in it, and the sentiments echoed by the slogan are not far off the mark. It is true that an elite minority owns a significant part of the wealth in the United States and very few go to the extent of denying this. However, there is much criticism against the proposed solution of redistribution of wealth.

Is inequality growing?

The Gini index (or coefficient), a measure of income inequality tells us that income inequality has been growing dramatically in the recent past. However, other studies of the income distribution in the United States do not support the notion that income inequality has been rising in the present century. The Census Bureau measures suggest that the income inequality had gone up from 1960 till 1990, but have remained roughly constant in the last two decades.

Inequality is much less pronounced when we consider income of households instead of that of individuals. The size of the households has shrunk over time and, the number of households has been growing at a much faster pace than that of the population growth. Income inequality statistics which fails to take this into account can be highly misleading.

According to US Treasury department statistics, between 1975 and 1997 the wealthiest 20% in the United Stated raised their status from receiving 43.2% of the national income to receiving 49.4% of it. The poorest 20%, at the same time from receiving 4.4% went down the rung to receiving 3.6%. But economist Steve Horwitz points out that the people who formed the bottom 20% in 1975 are for the large part different from the ones who formed it in 1997. The poorest had almost always raised their financial status and moved out the bottom quintile in these two decided. Moreover, 4.4% of the total national income in 1975 is a much smaller figure when compared to 3.6% of the total national income in 1997. The absolute position of low income individuals have been consistently improving for long.

Causes of inequality

The poor often remains poor because success in the market is partly luck and often influenced by closeness with the state. However, the consensus in twin adoption studies suggest that intelligence and conscientiousness are the strongest predictors of financial success.

The arguments against egalitarianism

Many economists think that it is the wealth of a small minority which makes the superior living standards of the common man possible. They argue that much of the wealth of the extremely rich is in the form of means of production and not in the form of consumer goods which are available in the market. It is the concentrated wealth which allows big corporations to invest in physical infrastructure. Such huge capital investment results in much higher productivity, higher wages and lower prices which wouldn’t have been possible at all in a society of self-sufficient farms and small traders. The growth of individual fortunes of businessmen pales in comparison to the growth of big business enterprises.

Big business enterprises are almost without exception, corporations, and not owned by a single individual. The big business enterprises would have long lost its status if it hadn’t served the needs of the masses, as they always serve the common man though not always in a manner visible to the untrained mind.

However, these economists readily concede that in the present world, to a large extent, wealth acquired and sustained through special state privileges and by maintaining proximity with the government. The elimination of government privileges, protection and subsidies will make the path of riches open to everyone, and not just to an aristocracy of pull. The regulatory burden and progressive taxation, especially in developing countries like India makes it increasingly difficult for an upstart to accumulate capital and reach the state of big business.

Reaction to the protests

Unlike the reaction to the Tea party movement, the public response to the Occupy Wall Street protests is largely favourable. The response is positive from left-liberal media which claimed that the protests are a left-wing tea party. While unions predominantly agree to the goals of the protests, some disagree with the anarchistic structure of the protests which is strikingly different from the unions which are well organized and authoritarian in structure. Intellectuals and people in the entertainment industry are largely supportive, and some of them make public speeches at the protests. Many leaders of huge corporations think that the protests are much understandable, though they often have disagreements on the nature and goal of protests. Most think that things are not as good as they ought to be and that to say otherwise would be a complete denial of reality.

The libertarian ambivalence

Some libertarians and political commentators who are well to the right on the political spectrum looked down upon the protests as a pincer movement, a diabolical plot of the left to overthrow the very foundations of a capitalistic society. However, some of them believe that the protests are well justified, and that it is high time that crony capitalists are stripped of their special privileges and positions. Their disagreement is not so much on the stated goal as it is on the nature of the protests and proposed solutions. Many of them think that the protests should be peaceful, and should make a coherent and well thought out case against central banking in particular and government power in general. Ben Bernanke, the chairman of the Federal Reserve and Ron Paul, the most libertarian politician from both the houses sympathized with the protests on some important levels, though for different reasons. While Ron Paul thought that the Federal Reserve (Fed) should be held up for criticism, Ben Bernanke dismissed the public outrage against the Fed as a misconception. However, both agreed that the economic situation of the country is dismal and people have reasons to find the policy response to it unsatisfactory.

The reaction of political leaders

Many political leaders across the world have expressed solidarity with the movement while some others have disagreed or have had mixed feelings about the same. The American President Barack Obama said that the protests express the deep frustrations of the American public with the aftermath of the financial crisis and the tendency of the powers-that-be to freeze the status quo. The Indian Prime minister Manmohan Singh said that there are reasons why people are protesting and that the system should be willing to honestly address these problems. The Former United Kingdom Prime Minister Tony Blair was among the few who strongly disagreed with the protests.

Conclusion

The performance of the world economies would have been better if it hadn’t been for panics and recessions which occasionally strike them. The public outrage against corporatism, inequality and the failures of central bank monetary management is understandable, but should be directed towards the real culprits.